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The rapid growth of NBFCs, especially during the nineties, has led to a gradual blurring of the fine line between banks and NBFCs. Non-Banking Financial Companies (NBFCs) are entities that provide certain financial services but does not have a banking license. NBFCs are incorporated under the Companies Act 2013 or 1956 and are engaged in the business of loans and advances, acquisition of shares, stock, debentures issued by the government or local authorities. An audit is an essential element in the functioning of a company as well as for NBFCs. NBFCs need to obtain a certificate from Statutory Auditor that they are engaged in non-banking financial institutions holding a certificate of registration under Section 45-IA of the RBI Act, 1934, to prove their eligibility. In this blog, we shall read about some particular points that auditors follow at the time of the Statutory Audit of NBFCs.
It is the type of audit which is mandated by the law. it is an essential audit of the final balance sheet of the company which is conducted every fiscal year.
Pointers that auditors follow at the time of Statutory Audit of a Company:
Note: It needs to be noted that, RBI[1] has decided to merge three categories of NBFC i.e. Asset Finance Company, Loan Companies and Investment Companies into a new category called NBFC- Investment and Credit Company( NBFC-ICC)
Read our article:Prudential Norms for NBFC Non-Deposit Taking
NBFCs conduct audits to check whether they have complied with prescribed norms to avoid penalty. Statutory Audit is a mandatory action performed every fiscal year. Unlike the Internal Audit, a statutory audit is mandatory. An independent Chartered Accountant who is independent of the business conducts the audit. The checklist given above for the Statutory Audit of NBFCs should be kept in mind by the NBFCs to ensure that the accounts published by the company are genuine and authentic.
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